An Adaptation From ‘Flash Boys: A Wall Street Revolt,’ by Michael Lewis
Sokoloff was Russian, born and raised in a city on the Volga River. He had an explanation for why so many of his countrymen wound up in high-frequency trading. The old Soviet educational system channeled people into math and science. And the Soviet-controlled economy was horrible and complicated but riddled with loopholes, an environment that left those who mastered it well prepared for Wall Street in the early 21st century. “We had this system for 70 years,” Sokoloff says. “The more you cultivate a class of people who know how to work around the system, the more people you will have who know how to do it well.”
.. The Wall Street banks controlled not only the orders, and the informational value of those orders, but also dark pools in which those orders might be executed.
.. “How many good brokers are there?” asked an investor.
.. Ten,” Katsuyama said. (IEX had dealings with 94.) The 10 included RBC, Bernstein and a bunch of even smaller outfits that seemed to be acting in the best interests of their investors. “Three are meaningful,” he added: Morgan Stanley, J. P. Morgan and Goldman Sachs.
.. One investor asked, “Why would any broker behave well?”
“The long-term benefit is that when the [expletive] hits the fan, it will quickly become clear who made good decisions and who made bad decisions,”